EDF Slides on Profit Outlook, Cut in Output Target: Paris Mover

By Tara Patel -
Nov 14, 2012

Electricite de France SA, the
world’s biggest operator of nuclear reactors, sank to the lowest
level in more than five months in Paris after saying earnings
aren’t expected to grow next year as it previously anticipated.

The company fell as much as 2.8 percent to 14.80 euros, the
lowest intraday price since June. EDF said yesterday after the
market close it was cutting an annual target for French atomic-
energy output for 2012 and profit may be little changed in 2013.

EDF management “is more cautious on 2013,” Philippe Ourpatian, an analyst at Natixis (KN), wrote today in a report,
cutting his price estimate to 16.50 euros from 18 euros.

The company also lacks clarity on the outcome of talks with
the government over tariff rates, taxes on renewable energies
and the future of nuclear power, according to Natixis.

The shares, down 21 percent this year, declined by 2.7
percent to 14.82 euros by 11:40 a.m. in Paris trading.

EDF’s nuclear output in France will be about 410 terawatt-
hours in 2012, down from a 415 terawatt-hour forecast. Output
fell 6.2 percent to 295 terawatt-hours in the first nine months.

The company added to maintenance halts and inspections at
plants after regulators at Autorite de Surete Nucleaire demanded
more stringent checks and upgrades after the Fukushima disaster
in Japan last year. EDF’s aging generators were also halted for
tougher-than-usual inspections that are required every decade.

It said earnings before interest, tax, depreciation and
amortization may be “stable” next year, with growth returning
in 2014. That compares with a prior medium-term target of annual
average Ebitda growth through 2015 of 4 percent to 6 percent.

EDF’s caution stems from its Edison natural gas business in
Italy, weaker trading outlook and pressures on eastern European
and Belgian power generation because of lower demand and prices,
Sofia Savvantidou, an analyst at Citigroup Inc., said in a note.

The French utility took control of Edison this year and has
pledged to renegotiate the unit’s natural gas import contracts,
according to Chief Financial Officer Thomas Piquemal.

EDF’s 58 reactors in France generate about three-quarters
of the country’s power, a higher than any other nation. It has
accumulated a deficit from paying for renewable-energy subsidies
in France that will reach 5 billion euros by the end of the year
and more in 2013, Piquemal said yesterday. The company is in
talks with the state on erasing the shortfall by 2017, he said.